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AUTO INSURANCE

Texas law requires you to have auto insurance, and if you still owe money on your vehicle, your lender demands it.
This publication provides answers to frequently asked questions about auto insurance:

What coverages am I required to have?
Who is covered by my policy?
What coverages are available?
Does my policy pay for damage to a rental car?
Is my insurance good in Mexico?
How do accidents and tickets affect my premium?
Texas has an automobile insurance Consumer Bill of Rights. Your company must send you a copy with your policy
or policy renewal. Take time to read it.

What Auto Insurance Pays
Auto insurance pays for damages, injuries, and other losses specifically covered by an auto insurance policy. Some
coverages - such as liability insurance - are required, while others are optional. Please read your policy carefully to
know what it covers. Pay special attention to the exclusions, which describe things your policy doesnt cover.

Texas Requires Proof of Financial Responsibility!

If you drive in Texas, you must show you can pay for accidents you cause. Most Texas drivers do this by buying
auto liability insurance. The law requires minimum coverage of $20,000 per injured person, up to a total of $40,000
for everyone hurt in an accident, and $15,000 for property damage. This basic coverage is called 20/40/15
coverage. However, basic coverage might not be enough if you are held liable for an accident. You should consider
buying more than the basic limits.

Your insurance company will send you a proof-of-insurance card listing the covered automobiles and drivers and
showing the policy number and expiration date. Your policy or a temporary binder also is acceptable evidence of
insurance. Youll have to show proof of insurance when you

are asked for it by a law enforcement officer
have an accident
register your car or renew its registration
obtain or renew a drivers license
get your car inspected.
Texas law provides severe penalties for violating financial responsibility laws:

First Conviction: $175 to $350 fine.
Subsequent Convictions: $350 to $1,000 fine, drivers license suspension, and impoundment of your automobile.
Note: Your Texas policy automatically meets the financial responsibility requirements of other states and Canada.

The Declarations Page

The front page of your policy is called the "declarations page." It contains useful information such as

the name of your insurance company
the policy number
your coverages and how much they cost
your deductibles, if you have any
the vehicles insured on the policy, their vehicle identification numbers, and their classifications for rating purposes.
It is a good idea to have the declarations page in front of you when calling or writing the insurance company or the
Texas Department of Insurance (TDI) about your policy.

You should also read the Automobile Insurance Consumer Bill of Rights. Your company must send you a copy of the
Bill of Rights with your policy or policy renewal. The Bill of Rights is a summary of your rights under Texas law.

Auto Insurance Coverages

The Texas Personal Automobile Policy offers eight common types of coverage. You select and pay for each
coverage you want. The eight types of coverage are:

Liability
Pays: Other peoples expenses for accidents caused by caused by drivers covered under your policy. This is the
only auto insurance required by Texas law.

The insurance company will pay amounts for which you are legally responsible, up to your policys dollar limits.
These may include the other partys

medical and funeral costs, lost wages, and compensation for pain and suffering
car repair or replacement costs and auto rental
punitive damages awarded by a court.
Liability also pays attorney fees if you are sued and bail up to $250 if you are arrested.

Covers: You, your family members, and anybody else driving with your permission, even if they dont have their own
liability insurance.

You and your family members also are covered when driving other peoples automobiles - including rental cars - but
not non-owned cars regularly available to you such as a company car.

Medical Payments
Pay: Medical and funeral bills arising from motor vehicle accidents, including those in which the victim was a
pedestrian or a bicyclist.

Cover: You, your family members, and passengers in your car, regardless of who caused the accident. You cant
collect from both your medical payments and your uninsured motorist/underinsured motorist coverages for the same
medical bills.

Personal Injury Protection (PIP)
Pays: Same as medical payments coverage, plus:

80 percent of lost income
the cost of hiring someone to take on the household and caregiver responsibilities of an injured person.
Covers: Same people as medical payments coverage.

An insurance company must offer you $2,500 in PIP, but you can buy more. If you dont want PIP, you must reject it
in writing.

Uninsured/Underinsured Motorist (UM/UIM)
Pays: Your losses from an accident caused by a hit-and-run driver or an uninsured motorist, up to your policys
dollar limits. Also pays if the other driver did not have enough insurance to cover all your expenses.

Bodily injury UM/UIM pays without deductibles for medical bills, lost wages, pain and suffering, disfigurement, and
permanent or partial disability.
Property damage UM/UIM pays for auto repairs, a rental car, and damage to items carried in your car. There is an
automatic $250 deductible. This means you must pay up to $250 of the repairs yourself.
Covers: You, your family members, passengers in your car and anybody driving with your permission.

Insurers must offer UM/UIM coverage, but you can reject this coverage in writing.

Note: Your UM/UIM insurance pays for a hit-and-run accident only if you promptly report it to the police.

Collision (Damage to Your Car)
Pays: Cost of fixing or replacing your car after an accident, regardless of who was driving or who was to blame.

Coverage Limit: Payment is limited to your cars actual cash value, minus your deductible. Actual cash value is the
market value of a car like yours before it was damaged. To lower your premiums, you might consider dropping this
coverage if you have an older car that is paid for.

Comprehensive (Physical Damage Other than Collision)
Pays: Cost of replacing or fixing your car if it is stolen or damaged by fire, vandalism, hail, or another cause other
than collision. Comprehensive coverage also pays for a rental car or other temporary transportation if your car is
stolen.

Coverage Limit: Payment is limited to your cars actual cash value, minus your deductible.

Caution - Your policy wont pay for auto theft unless you report it to the police.

Towing and Labor
Pays: Towing charges when your car cant be driven. Also pays labor charges, such as changing a tire, at the place
where your car broke down.

Rental Reimbursement
Pays: A set daily amount for a rental car if your car is stolen or is being fixed because of damage covered by your
auto policy.

Available Coverages with a Texas Personal Automobile Policy
Type of Coverage Pays For Covers Required?
Liability Other peoples medical expenses and auto repairs, attorney fees, and $250 bail You, your family, and others
driving with your permission By state law
Uninsured/Under-insured Motorist Medical and funeral expenses, car repairs, car rental and replacement of
damaged contents You, your family, and your passengers No, but company must offer
Medical payments Medical and funeral expenses You, your family, and your passengers No
Personal Injury Protection (PIP) Medical and funeral expenses, lost wages, homemaker/caregiver services You, your
family, and your passengers No, but company must offer
Collision Car repair or replacement after an accident Your car, regardless of driver By lenders
Comprehensive (Physical Damage other than Collision) Car repair or replacement after fire, hailstorm, theft, or other
non-collision event; rental car after theft Your car By lenders
Towing & Labor Towing and labor charges when your car is disabled Your car No
Rental Reimbursement A rental car if your auto is undergoing repair for covered damage You and your family
members No

What family members are covered by my personal auto policy?
Your personal auto policy covers your spouse, blood relatives, in-laws, adopted children, wards, and foster children
living in your home, even if not named on the policy. "Spouse" includes a spouse living elsewhere during a marital
separation. Also covered are family members attending school away from home.

Do I need to buy special coverage when renting a car?
Auto rental agencies offer collision damage waivers as well as liability policies, which offer separate types of
coverage to the renter. The collision damage waiver is not insurance; it is an agreement that the rental company will
give up, or waive, its right to recover costs of property damage to the auto from the renter with certain exceptions,
regardless of who is at fault. You might not need this extra expense because your auto liability policy already covers
such damage. This coverage limit, however, might be less than the value of a rental car. If you rent cars often, it
may cost less to raise the liability limit on your auto policy rather than buying collision damage waivers each time you
rent. The Texas Automobile Rental Liability Policy provides liability insurance for renters who do not have a personal
auto policy. Texas law requires liability coverage for all drivers in Texas. It pays for bodily injury and property
damage to others that result from the actions of the insured driver.

Can I get liability insurance if I dont have a car?
Yes. You can buy a non-owner liability policy. A non-owner policy pays for damages and injuries you cause when
driving a borrowed or rented car but not for damage to the auto you are driving.

Is my policy good in Mexico?
Mexico does not require automobile insurance. However, be advised that in Mexico you can be held criminally
responsible as well as financially responsible for any auto accident you cause. In addition, the police may detain you
until they determine who is at fault if you are in an accident that results in an injury. You will have to show that you
either have insurance recognized by the Mexican government or the financial ability to pay any judgment against
you.

Mexico does not recognize U.S. auto liability policies. You can buy Mexican liability insurance from Texas agents who
specialize in it.

Some U.S. companies provide a free endorsement extending your policys coverage to infrequent trips of up to 10
days and as far as 25 miles into Mexico. You can buy coverage for longer stays, but it is valid only within 25 miles of
the border. Telephone books in border towns list insurance agents that specialize in car insurance for travel in
Mexico. Your regular local agent also might be able to help you find coverage with a Texas-licensed Mexican
company.

You also can buy a limited Mexico "tourist" endorsement that extends your Texas liability coverage to pay expenses
exceeding those covered by a Mexican liability policy. This endorsement covers trips of any distance and any length
of time.

Ask your agent which endorsements your insurance company offers. Remember that some companies attach
endorsements to your policy automatically, while others do so only at your request. Other companies do not cover
accidents in Mexico at all.

Will my auto policy pay for flood damage?
Yes, if you have comprehensive "other than collision" coverage.

Does my policy cover equipment such as cellular phones?
Your policy wont pay for tapes, compact discs, cellular phones, or citizen band radios or for stereo equipment not
permanently installed in your car unless you pay extra for separate coverage.

Do I have to buy collision and comprehensive coverage?
Texas law does not mandate this, but lenders usually require collision and comprehensive on cars they are
financing.

When I buy an additional car or a replacement car, is it automatically covered?
Yes, but there are certain limitations. An additional car automatically has the same coverage as the car with the
broadest coverage provided by your policy. For example, if you have two cars - one with liability coverage only and
one with liability, collision, and comprehensive - and you buy a third car, the third car will automatically have liability,
collision, and comprehensive.

A replacement car, however, automatically has the same coverage as the car it replaced. For example, if you trade
in an older car, which has only liability coverage, on a new car, the new car automatically has only liability coverage.

Be sure to notify your insurance company as soon as possible that you have added or replaced a car and which
coverages you want for the new car. You could lose coverage on the new car if you wait longer than 30 days.

What if I drop collision and comprehensive on my financed car?
Dont. The lender will buy single-interest automobile physical damage coverage. Its expensive and protects only the
lender, who will add the premium to your note. You may drop collision and comprehensive once you have paid off
your car loan, but you should keep the coverages as long as you owe money on your car.